Pakistan’s future depends on an economic revival.
The first international Investment Conference, organized by the Board of Investment in Islamabad on Oct. 27 and 28, offered local and foreign investors the economic roadmap our government has charted over the last 15 months. The country’s economic redirection, development prospects, liberalized investment regime, and ongoing structural and institutional reorientation make it an ideal destination for capital.
Demographically and geographically vibrant, Pakistan’s 110-million available labor force—some 60 percent of the total population—counts for the ninth largest in the world. The rise of the middle class is fueling spending and opening up new opportunities across sectors. Pakistan’s central plains are a rich granary feeding 180 million people; its shores provide the shortest access to landlocked Central Asia; its hilly tracts in the south are brimming with mineral resources. The opportunities to develop Pakistan—in agriculture, industries, natural resources and minerals, education, health—are diverse, wide-ranging and accessible. And Pakistan is open for business.
Since coming into office, our government has put priority on engineering and implementing a comprehensive macroeconomic course-correction while simultaneously focusing on upgrading and augmenting national infrastructure. Our endeavors have taken. The rupee has stabilized—rising in value more than 10 percent against important currencies. Revenues and foreign-exchange reserves have improved, and inflation and the fiscal deficit have been reduced. Increased liquidity has encouraged banks to lend to the private sector, aiding productivity. Our projected GDP growth rate now ranges between 4 and 6 percent, considerably higher than in previous years, and we expect our policies to bring about capital formation, employment, and an improved tax-to-GDP ratio, currently the lowest in the region.
Foreign investment forms an integral part of our development drive. Our government believes in a no-holds-barred, extremely liberal investment regime. Unlike other countries in the region, Pakistan allows 100 percent foreign equity and no limit on the repatriation of profits, particularly in large-scale infrastructure and manufacturing projects. We are business- and investment-friendly, and, for industries, our tax regime—with concessions to bolster output—ranks among the most conducive and best-run in the region. We also provide exclusive economic zones and infrastructure subsidies as well as support in research and development. Our gradual but steady improvement on the Baseline Profitability Index marks Pakistan as an attractive long-term investment proposition.
As macroeconomic indicators have improved, investor confidence in Pakistan has been restored. The recent government-backed Eurobond issue was oversubscribed. The stock markets are bullish. The transparent divestment of state equity in firms has yielded a robust response. Investors are excited about the sale of some of the government’s stakes in the Oil and Gas Development Company, Pakistan Petroleum Limited, Habib Bank, Allied Bank.
We plan on privatizing the distribution network and rationalizing electricity tariffs to attract investment in the power sector, whose problems have stunted economic growth. Our government has added 1,500 megawatts of electricity to the national grid and a number of projects in the pipeline to meet existing and projected demand for power. We have invited the private sector to set up an LNG import terminal to start substituting furnace oil in the power sector with cheaper, environment-friendly natural gas. We will soon build an LNG terminal at Gwadar, the third largest warm-water port of Pakistan, in mineral-rich Balochistan.
Pakistan is evolving into a mature and pluralistic democratic polity, and our government is well aware of the people’s aspirations and their demand that we deliver on our promise to improve their lot in life. Our government shall leave no stone unturned to live up to these expectations and to fulfill our responsibility. The people’s welfare is at the heart of our economic agenda. In addition to investing in viable development initiatives, our government is spending around Rs. 80 billion each year on various income support and employment generation programs.
Sustained economic prosperity will require political and social maturity. We can, collectively, overcome whatever challenges lie ahead if we pursue our common goal with patience, prudence and an unflinching steadfastness. We encourage local and foreign investments because our long-term economic and social development depends on it. In the not-too-distant future, I hope we will all find ourselves taking pride in the fact that we contributed, each in our own way, in making Pakistan prosper again. Economic stability and growth are critical to bring about improvements in education, health and social development. This is the only dream worth dreaming—and fighting for.
Sharif is the prime minister of Pakistan. From our Nov. 1-15, 2014, issue.